Crude oil prices will continue to remain choppy as the US along with several European nations issued sanctions on Russia. Though Germany halted the $11 billion Nord Stream 2 gas pipeline project, the US, UK and other European nations have been careful in their response and refrained from directly targeting the energy sector. Amid heightened geopolitical tensions after Russia’s President Vladimir Putin on Monday announced recognition of two breakaway separatist-ruled regions of Ukraine as independent states, negotiations over the Iran nuclear deal would now be key to ease oil supply. The deal could come through soon leading to additional supply of oil.

The US, under former President Donald Trump, imposed sanctions on Iran in 2018, which drastically brought down the country’s crude production and exports.

Current negotiations with Iran have been progressing well though a couple of issues are yet to be resolved, reports said.

Estimates indicate that Iran’s return to the international markets would add half a million barrels daily between April and May. Another 800,000 bpd could come up by the end of the year, energy news portal Oil Price said, quoting a Citi report.

According to S&P Global's Platts Analytics, a comprehensive agreement could allow 1.5 million b/d of export growth within nine months of sanctions relief.

Also read: Explainer: Roots of the Ukrainian crisis can be traced to 2014

With upward inflationary pressures in the US, which have pushed up cost of living, the immediate challenge for President Joe Biden would be to ensure that oil prices do not rise further. In January, inflation, as measured by the consumer price index, stood at 7.5 per cent compared to the corresponding month in the previous year—the highest since February 1982.

Biden has already asked the Organization of the Petroleum Exporting Countries (OPEC) and its allies to increase oil production.

Following Putin's decision, the US, UK and several other European nations announced sanctions targeting Russian banks.

While the Russia-Ukraine tension would have an impact on global economic recovery, Europe, which sources about 35 per cent of its energy requirements from Moscow, will be particularly worried.

In a report, news agency Reuters said that the US and European Union have already urged countries such as Qatar and Japan to help provide extra liquefied natural gas (LNG) shipments.